RF's Financial News

Sunday, February 23, 2014

Last week I laid out the
groundwork for what I believe is the machinery that will usher in a ‘global
currency reset’. If I'm right, this will be the most significant economic
policy change since the end of WWII.Let’s discuss the proper way to navigate such troubled waters.

First off, I think we need a guidepost.We need to be able to measure the time line
of these events as they take place. I
have decided to use the Fed's actions as the milestone for when the implementation
of such a reset is coming. Starting with
Greenspan, and then Bernanke – any time the economy was starting to soften, the
Fed would rush to the rescue by cutting rates and printing money. The economy was never allowed to correct the
excesses of the boom that preceded the slowdown. Over and over it went,
as they would simply inject stimulus into an overly tired body.

Often it worked.Economic activity perked up on the heels of the lower rates and the
extra dollars. The economy would then go
on another ‘up’ cycle until that injection wore off, and elements showed signs
of weakening.Then (like clock work) the
Fed would come rushing to the rescue (again) with lower rates and more money –
Rinse and Repeat.

However, something is happening right now that
flies in the face of that. The Fed has
started to remove the stimulus we call QE, despite a weakening overall economy.
This is a significant turn of
events. The Fed knows how the overall economy is actually performing, and
instead of increasing the amount of money they're doling out, they're reducing
it. Therefore, for the first time in
over 20 years, a sagging economy is being met by less Fed activity, rather than
by more monetary stimulus.

My original thought was that the Fed would talk
a big game about ending QE, but would not actually do it. Then they did the first ‘taper’. I thought that this could have been just a display
of ‘moxie’ to the rest of the world.And
in the face of weakening economic news, they did the 2nd taper.Now we're looking at March and asking: Will
they again reduce the amount of QE?Thus far the Fed has been comfortable
blaming outside influences such as the weather for the bulk of the lousy economic
numbers.

-On Tuesday homebuilder
sentiment had its single biggest fall in the history of the report.

-The Empire State Fed
report had its largest drop in economic activity in 18 months.

-Caterpillar
told us that global sales for the equipment fell for the 14th straight month.

-The
Philly Fed report of economic activity fell from a reading of 9.4 to a
reading of ‘Negative’ 6.3.

-And housing
sales fell like a rock – again.

Everyone is blaming the
weather, and is some of this weather related? Absolutely. Ice storms in Atlanta, never ending snow falls
in the northeast, and record-breaking cold temperatures are business
inhibitors.When you cancel 4,000
flights, and place cities on emergency alert, some level of economic activity
will come to a halt. When the Fed tapers
in March, it will be completely consistent with its previous actions.But what happens when the weather breaks?

If we get into the summer (mid-July) and the Fed
has not stopped the taper, then we must assume that their game plan has changed,
and they are willing to let the economy roll over. If we see that, I would
have to believe that we are in the first steps of ushering in this global
reset, and the timeline then becomes fairly defined. By reducing
the taper $10 Billion at each Fed meeting, the Fed
would reduce the stimulus to zero by December 2014. Our economy (at that point) would at best last
another year without stimulus before entering a fairly hefty recession.On the other
hand, if the Fed (at minimum) stops the taper this summer, it would mean that
they are not ready for the global reset and will keep the economy limping along
for longer. That would also mean more
all time highs to be found in stocks.

Job #1 then is to try and gauge when a global
reset could happen. Job #2 is what to do
when/if our suspicions are confirmed.This is where gold and silver start to play.Gold backed currencies have their own set of
problems.But since the Central Bankers (who
control most of the world’s gold) believe in a gold backed currency, they will certainly
give gold a very high weighting in the new global currency.And, considering how vocal the Chinese are
about (a) being tired of the U.S. devaluing the dollar, and (b) wanting themselves
to be a bigger part of the world stage, it’s not a coincidence that they are accumulating
gold at a very rapid rate.

Very few individuals in the U.S. own
gold. The raids on the gold paper futures
have driven prices down, and have sent many of the ‘gold holders’ to sell and
invest elsewhere.This is why I believe
that gold (and to a smaller extent silver) are the single best investments that
will help you through a potential reset. The problem for many is simply the $1,325 price
per ounce of gold.This sends many to go
with silver and it’s $22 per ounce price tag.Will silver do well? Yes, I’ve
said for years that silver could easily go to $70 per ounce.But it will still be gold that Central
Bankers choose to back their currency.

One question often asked is: What
should I buy - coins, bullion, or rounds? With silver you should own
one ounce, silver ‘eagle’ coins.They
are the single most recognized coin you can own.In gold, it’s a slightly different
story.With gold costing $1,325 per
ounce, a gold ‘coin’ is really worth too much to be practical.Therefore, I suggest buying 1/10th
ounce gold coins.Holding silver eagles
and some small weight gold coins are good survival tactics. For holdings beyond that which you would use
for emergency money, then you should consider one ounce gold coins, and bulk silver.
I believe having some of both.

The Market...

So far – so good.I’ve been thinking that the markets would run-up
to their all-time highs, but would come up short and finally fade out. Currently
the markets have run-up to their highs, have been trading sideways, and have
not been able (as of yet) to break through. That’s certainly not through lack of
effort.This week’s economic news was
horrendous, but the markets did not roll over and drop. We had a flat
Tuesday, dropped hard on Wednesday, came all the way back on Thursday, and
faded slightly on Friday.So, the desire
to continue pushing higher is certainly still there.

We let a fair number of our positions get called
out under a ‘covered call’ scenario and are currently sitting mainly in cash.If this market does break to the upside and
make new highs, I’ll be glad to jump back in.But I’d rather be light as I am anticipating a pullback from our
run-up.Now, if the Fed were to suddenly
halt their
tapering (or reverse it), we would certainly be setting new highs again. But with the taper still ‘on’ and the economy
slowing, I think that it will be difficult for the banks to manufacture a sustainable
break to new highs.

Now, there may be one 'last
push" left in the markets (where they try and suck in the last of the hold
outs).But I think J. Q. Public realizes
that the markets are at all time highs only due to Trillions of Fed dollars,
and that the markets simply follow the money.

If I'm right and this begins to fade
here, the drop could be substantial, and I'd want to be playing on the short
side. If I’m wrong, I would need to see a
few consecutive days of market closes, above the old all time highs. The S&P closed at 1,836 on Friday – only 14
points away from it’s all time high of 1,850.But the DOW closed at 16,103 and it’s all-time high is 16,580.While we may be able to get above 1,850 on
the S&P for a bit of a show – gaining another 400+ DOW points in a lousy
economy and a tapering Fed is going to be difficult.

This week I sold out of NUGT and SLW for 70 and 35%
gains respectively.As much as I love
the metals – the miners (including NUGT and SLW) are more affected by the
general market than they are the price of gold.Therefore, with the ‘pause’ in the general market I grabbed the opportunity
to take some profits.

I still like stocks such as: BIIB, NFLX, TSLA, QIHU and
some commodities – that seem to be able to buck the trend and go higher – when
the S&P is either flat or lower.

Some other stocks that I’m interested in at the
moment are: MNKD – with its move above $6 on Friday, and ARIA – with its peak
above $9 on Friday.Both of these are
showing very ‘interesting’ options action – and certainly worth a second look
this week.

Lastly – please be aware of the naturally inverse
relationship between the Japanese Yen and the S&P.If the Japanese Yen moves lower (FXY) the
S&P index will move higher – and vice versa.For many weeks now, this relationship has
been broken – yet another reason why I believe something very different is
being played out in the back rooms around the economic globe.

Expressed
thoughts proffered within the BARRONS REPORT, a Private and free weekly
economic newsletter, are those of noted entrepreneur, professor and author, R.F.
Culbertson, contributing sources and those he interviews. You can learn more and get your free
subscription by visiting: <http://rfcfinancialnews.blogspot.com> .

Please
write to Mr. Culbertson at: <rfc@culbertsons.com> to inform him of any
reproductions, including when and where copy will be reproduced. You may use in
complete form or, if quoting in brief, reference <rfcfinancialnews.blogspot.com>.

If
you'd like to view RF's actual stock trades - and see more of his thoughts -
please feel free to sign up as a Twitter follower - "taylorpamm" is the handle.

If
you'd like to see RF in action - teaching people about investing - please feel
free to view the TED talk that he gave on Fearless Investing: http://www.youtube.com/watch?v=K2Z9I_6ciH0

To
unsubscribe please refer to the bottom of the email.

Views
expressed are provided for information purposes only and should not be
construed in any way as an offer, an endorsement, or inducement to invest and
is not in any way a testimony of, or associated with Mr. Culbertson's other
firms or associations. Mr.
Culbertson and related parties are not registered and licensed brokers. This message may contain information
that is confidential or privileged and is intended only for the individual or
entity named above and does not constitute an offer for or advice about any
alternative investment product. Such advice can only be made when accompanied
by a prospectus or similar offering document. Past performance is not indicative of
future performance. Please make sure to review important disclosures at the end
of each article.

Note:
Joining BARRONS REPORT is not an offering for any investment. It represents
only the opinions of RF Culbertson and Associates.

PAST
RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS
THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING
ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER
VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE
INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT
TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES,
AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN
ONLY TO THE INVESTMENT MANAGER.

Alternative
investment performance can be volatile. An investor could lose all or a
substantial amount of his or her investment. Often, alternative investment fund
and account managers have total trading authority over their funds or accounts;
the use of a single advisor applying generally similar trading programs could
mean lack of diversification and, consequently, higher risk. There is often no
secondary market for an investor's interest in alternative investments, and
none is expected to develop.

All
material presented herein is believed to be reliable but we cannot attest to
its accuracy. Opinions expressed in these reports may change without prior
notice. Culbertson and/or the staff may or may not have investments in any
funds cited above.

Remember the Blog: <http://rfcfinancialnews.blogspot.com/>
Until next week – be safe.

Sunday, February 16, 2014

This week something happened that
was quite remarkable. Despite Janet
Yellen telling Congress that the Fed was going to continue its tapering, the
market gave her a big pass because she said: "If the data were to turn
unfavorable, then of course there would be reason to pause the taper.”

Okay, so what's that mean? When the Fed first tapered, did the data really
suggest a good strong recovery? NO.

-Mortgage
applications were crashing,

-Housing
sales were falling like a rock,

-An unimaginable
amount of people were opting out of the job market,

-And Obama-care
was causing countless issues.

Then in January, when the Fed
tapered again – did the data suggest a good strong recovery?NO.

-Jobs
data was still horrible,

-The
market was still falling,

-Retail
sales showed a decrease of 0.4%,

-Companies
were reporting sketchy (at best) earnings,

-And
many economists were warning of slowing GDP growth,

-Barclays
announced that they were cutting 12,000 workers,

-And
U.S. Initial Jobless claims increased yet again.

Why is the Fed tapering when the
economy is just barely limping along?

Why is the Fed saying they will need
to see more declining data to end tapering, when we've had gobs of this kind of
data and they're explaining it away with ‘the weather’?

My only answer to these questions is
either: a ‘global reset’ is coming, or the Fed will soon announce yet another
program that will allow it to push more money into the economy.Let’s explore the first one, because it’s the
one that makes the most sense.

The IMF World bank knows that
there's too much debt in too many countries for it to ever be repaid. Lately,
global currency fluctuations have been so extreme and so rapid; it is often
impossible to carry on continuous trade. No matter where I look, the evidence suggests
that something must be done.I think
there is a plan afoot to replace the U.S. dollar as the global reserve
currency.But more than that, plans are
being made for a complete rebalancing of every country’s debts versus their
‘worth’ in natural resources, precious metals (gold and silver), output per
capita, productivity, demographics, etc.The following quotes are from ‘China Daily’:

-“The World Bank's former chief economist wants
to replace the US dollar with a single global super-currency, saying it will
create a more stable global financial system.”

So the first thing to consider is
that China is becoming very vocal about wanting to rid the world of U.S.
supremacy.This is no idle threat as China
is scheduled to outpace the U.S. economically in just a few short years. At
that point, we will all need to respect the tremendous amount of gold and
silver that China and other Asian nations have amassed.

In the not so distant future, there could
be an announcement of a global currency reset where:

-Debts
will be discharged and equated to different values.

-Countries
will be valued and ranked based on real tangible assets.The countries that are the richest (in real,
tangible elements – not ‘fiat’ money) will carry more weight.This ‘weighting’ explains why China has been
ridding itself of dollars and buying up tangibles such as: gold, silver, oil,
land, farms, buildings, and businesses.

-SDR's (special
drawing rights) will be constructed that will allow distribution of real assets
between countries (in order to facilitate trade).

-AND the
U.S. dollar will no longer be the global reserve currency – the new SDR will.

This explains why the Fed started to
taper in the first place, and answers why they continue to taper in light of
all of the bad economic data.If the
wheels are in motion to launch this SDR – then there's no longer any reason to
prop up a failed economy.For the past
20 years, every time the economy has shown that it needed to contract and go
through a healthy recession and regroup, the Fed has rushed to the rescue with
tons of free money. The single biggest
example of this was during the 2008 meltdown. When QE-1 ended and things got weak, the Fed
came out with QE-2. When QE-2 ended and
things got weak, the Fed came in with ‘The Twist’.When that expired, the Fed rushed in with QE-3.
But now, after all this printing, and with the economy still soggy – they are
REMOVING the stimulus.If the Fed
doesn’t halt the tapering by this summer, then something MAJOR has changed, or they
are going to announce another program that allows them to jam more money into
the system.

If/When we have a global currency
reset, here are a couple thoughts:

-What
happens to our money?Is the ‘old’ $100K
now worth $200K or $50K?

-What
happens to prices, and the value of land, homes, and businesses?

-What
about interest rates? (Will they be higher to service all the debt?)

-What
about gold? Will these new SDR's be
backed by gold? Indirectly yes.The countries with the most gold (and other
redeemable assets) will have their currencies carry a higher weighting in the
composition of the SDR.For the past 3
years, Gold has been manipulated lower to facilitate China getting rid of
dollars and amassing gold. When everyone is satisfied that the Chinese have
the proper amount of gold that gives their currency the proper weight in the global
SDR, then gold will no longer be manipulated lower.

The good news is that I believe we
exit this ‘global currency reset’ with something better than what we have now. The Fed must be tired of creating booms and saving
us from the busts.The world is telling us
to stop spending more than we take in.And we’re all tired of the U.S. Government pushing for more control over
our lives. Maybe, a good, old-fashioned
economic shake-up will get people to focus on what the hell happened to our
country, and how to get it back.And that
would be a breath of fresh air.

The Market:

After January’s long market plunge,
the market has roared back within ‘spitting distance’ of it’s old highs.So do we break through and make new highs, or
do the old highs act as resistance and we fall back?

A couple weeks ago we suggested that
the market would put in a big bounce, come up shy of the new highs, and roll
back over. We're now in the range of ‘coming
up shy’.

Will I be surprised if they punch
through the old highs? Yes I will. It is one thing for the banksters to want to
keep the market running, but it’s very different for them to pull it off.

While I will be surprised to see
them punch us through those old highs, one thing that I constantly remind
myself is that we’re living through some very odd times.Times where all of the old rules are out the
window.Last week, CNBC reported how
great our economy was doing, and that all we needed was just one more piece of
BAD DATA and the Fed would cancel the taper.One day, good news will again be good news, we just don’t know whether
that will be tomorrow, or after we gain another 10,000 DOW points.

Did I profit by this bounce?Absolutely.But (at this instant) I have a fair amount of cash and am ready for a
market pullback.I think that this week
the market’s run stalls. We then do a
bit of sideways up and down chop, and finally fade lower.The other way that this could play out
is:(a) they push us up over the old highs,
(b) which drag in the remaining ‘doubters’, and (c) as soon as everyone's all in
– the rug-pull comes.Only time will
tell.

So, I’m feeling that it’s time to
play defense until it’s clear that we've either broken over the highs
forcefully, or have entered a period of fading. I don't want to get caught on the wrong side.

Tips:

I cashed out of Tesla (TSLA), FireEye (FEYE),
Nividia (NVDA) and REGN last week – with gains of over 200%, 200%, 50% and 30%
respectively.It was a great week.And in the entire portfolio, we’re up over
13% and it’s only mid-way thru February.

Currently, the S&P’s have broken over 1,826 and
are sitting at 1,839.

-Gold and silver are
UP.

-The Stock markets
are UP.

-The Japanese Yen is
UP.

-Treasuries are UP.

-Commodities are
UP.

-In a nutshell – all
of this is IMPOSSIBLE.Treasures and the
stock market should not both be UP together.The Yen and the stock market should not both be UP together.Gold and the stock market should not both be
UP together.

At this point, I still like the metals here as a
hedge: Gold (GLD), Silver (SLV), and especially the physical metals.Gold has gone over it’s moving average, and
has appeared to put in a bottom, with silver following nicely.I’m also playing the miners through NUGT (a
3X ETF) and SLW – both doing nicely.FEYE,
SSYS, PRLB and DDD are coming back to life.I still like: BIIB, INCY, NFLX, with my favorite set-up being QIHU.

My
currentshort-term holds are:

-QIHU – in @ $91.20 - (currently $99.25)

-NUGT – in @ $35.25 – (currently $50.29)

-SLW – in @ $20.25 – (currently $25.38)

-USO
– in @ $34.51 - (currently $35.91)

-FXY
– in @ at $96.47 - (currently $95.93)

-SIL – in at 24.51 - (currently 14.96) – no
stop,

-GLD (ETF for Gold) – in at 158.28, (currently
127.31) – no stop ($1,319 per physical ounce), AND

I'd like to recommend a website - http://www.simpleroptions.comIt's an excellent
resource and 'honestly' - I've been following them for over 6 months and
they're more right than they are wrong with their predictions, and that's a
rarity in this climate.Please check
them out on my recommendation.

Disclaimer:

Expressed
thoughts proffered within the BARRONS REPORT, a Private and free weekly
economic newsletter, are those of noted entrepreneur, professor and author, R.F.
Culbertson, contributing sources and those he interviews. You can learn more and get your free
subscription by visiting: <http://rfcfinancialnews.blogspot.com> .

Please
write to Mr. Culbertson at: <rfc@culbertsons.com> to inform him of any
reproductions, including when and where copy will be reproduced. You may use in
complete form or, if quoting in brief, reference <rfcfinancialnews.blogspot.com>.

If
you'd like to view RF's actual stock trades - and see more of his thoughts -
please feel free to sign up as a Twitter follower - "taylorpamm" is the handle.

If
you'd like to see RF in action - teaching people about investing - please feel
free to view the TED talk that he gave on Fearless Investing: http://www.youtube.com/watch?v=K2Z9I_6ciH0

To
unsubscribe please refer to the bottom of the email.

Views
expressed are provided for information purposes only and should not be
construed in any way as an offer, an endorsement, or inducement to invest and
is not in any way a testimony of, or associated with Mr. Culbertson's other
firms or associations. Mr.
Culbertson and related parties are not registered and licensed brokers. This message may contain information
that is confidential or privileged and is intended only for the individual or
entity named above and does not constitute an offer for or advice about any
alternative investment product. Such advice can only be made when accompanied
by a prospectus or similar offering document. Past performance is not indicative of
future performance. Please make sure to review important disclosures at the end
of each article.

Note:
Joining BARRONS REPORT is not an offering for any investment. It represents
only the opinions of RF Culbertson and Associates.

PAST
RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS
THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING
ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER
VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE
INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT
TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES,
AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN
ONLY TO THE INVESTMENT MANAGER.

Alternative
investment performance can be volatile. An investor could lose all or a
substantial amount of his or her investment. Often, alternative investment fund
and account managers have total trading authority over their funds or accounts;
the use of a single advisor applying generally similar trading programs could
mean lack of diversification and, consequently, higher risk. There is often no
secondary market for an investor's interest in alternative investments, and
none is expected to develop.

All
material presented herein is believed to be reliable but we cannot attest to
its accuracy. Opinions expressed in these reports may change without prior
notice. Culbertson and/or the staff may or may not have investments in any
funds cited above.

Remember the Blog: <http://rfcfinancialnews.blogspot.com/>
Until next week – be safe.

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